Chula Vista begins work on redevelopment puzzle

Chula Vista became the first city in the county Monday to wade into the testy waters of using a state-mandated oversight board to gradually terminate its redevelopment agency.

The new arm of state and county government was formed as a result of the Feb. 1 dissolution of about 400 redevelopment agencies across California. In San Diego County, 16 other cities will soon meet with similar oversight boards to begin untangling the agencies’ financial affairs, as required by legislation passed in Sacramento last year. Those former agencies have remaining contractual obligations, like bond payments, and assets that must be dealt with by an independent board, according to the state Legislative Analyst’s Office.

Chula Vista’s meeting Monday highlighted some of the lingering concerns with the process, including city employees voting on personnel expenses and multimillion dollar projects, and the pressure to meet rapidly approaching deadlines.

The newly appointed seven-member board approved about $3.2 million of the former redevelopment agency’s outstanding contractual obligations, detailed in 70 line items for the period between January and June 2012. One of those items included $266,879 for salaries and ongoing administration for redevelopment work for the same time frame.

Trustees include two appointments by county Supervisor Greg Cox: Paul Desrochers and David Watson, who are both former directors of the Chula Vista Redevelopment Corp. The board also includes two appointees from Mayor Cheryl Cox: Eric Crockett, the former redevelopment director, and a former employee of the now defunct redevelopment agency, Janice Kluth.

The state legislation required that one mayoral appointment, Kluth, had to be a previous agency employee representing the largest affected employee union. Crockett and Kluth voted on a personnel budget, that includes their annual pay through the city for continued redevelopment work. The volunteer board does not include stipends for service.

Deputy City Attorney Simon Silva later explained the vote was not a conflict because the two employees were not voting on their individual pay, but on broader personnel budgets.

The oversight agency also includes appointments from several tax-sharing entities, as required. Otay Water District Treasurer David Gonzalez will represent the water agency, which received a portion of tax-increment collected from redevelopment properties. Southwestern College Director of Finance Wayne Yanda and Chula Vista Elementary School District Assistant Superintendent Oscar Esquivel are also oversight trustees.

Board President David Watson, a real estate attorney, raised concerns about the city’s list of obligations because the city did not provide a legal examination of whether any of the contracts could be easily terminated.

He also expressed concern about rushing to react to the new laws.

“Don’t pressure me into approving something by telling me we have to approve it by April 15. It won’t be my problem if the deadline isn’t met. It will be my problem if I approve something I wasn’t supposed to approve,” said Watson, who also acknowledged that if contract obligations aren’t met, the city could be sued.

The board unanimously voted to approve almost the entire list of obligations, aside from about $51,000 for a facade improvement effort tied to a larger federally funded program called Cilantro to Stores, and a few items pulled by staff for further review.

Landowner Earl Jentz and his attorney, Christopher Garrett, filed an 161-page response last Wednesday to the city’s proposed actions, stating some of the obligations were incurred after a June 29 state deadline and therefore not legal. The letter also alleges violations of the state’s open-meetings law, saying the public did not have sufficient time to review material presented to the City Council in January and February when the entire list of obligations was forwarded to the oversight board for approval.

“At some point, outside auditors are going to look at these things, the state’s Department of Finance is going to look at these things. If they have questions, then they will come back to today’s date and say, ‘Well, why did the oversight board just go ahead and rubber stamp all this stuff, why didn’t they wait for all the information?’” Garrett said. “The concept of an oversight board is more than just meeting a deadline.”

Deputy City Attorney Silva said the list is the redevelopment agency’s de facto obligations.

“We believe, from the staff’s side of this, that we have tried to do this properly. We tried to be as prudent and as cautious as possible for what we put in there as opposed to just throwing everything in there and seeing what would stick,” Silva said.